The Khrapunov files: assets frozen in Switzerland melting away in Luxemburg/II

Since well over two years, assets belonging to the former mayor of Almaty Viktor Khrapunov and his family remain frozen in Switzerland on the order of prosecutors. No decisive action has been taken in order to let justice take its course, though. Throughout the process, Khrapunov and associates keep frantically trying to twist the affair in such a way that it looks as though not lack of action is reason for concern, but rather attempts to clear things up tend to be presented as “orchestrated” schemes initiated by Kazakh officials who are supposed to be “lobbying” among Switzerland’s decision-makers to nail the perpetrators. This is the main aim of Khrapunov’s attempts to depict himself as a victim of “political” persecution rather than the imposter he is. In reality, Kazakhstan’s judicial authorities have obtained a cooperation agreement to exchange facts and expertise with their Swiss counterparts to collect enough proof of the illicit origin of the Khrapunov family’s “possessions” to allow proceedings in Switzerland for money laundering – all perfectly under Swiss law. Apparently undeterred by provocations from the Khrapunovs, Swiss politicians have started to express their concerns about the effect such provocations appear to have on part of the authorities.

BY CHARLES VAN DER LEEUW, WRITER, NEWS ANALYST

The Khrapunov files: assets frozen in Switzerland melting away in Luxemburg/II“National deputy of the SVP (Schweizerische Volkspartei – centre-left) Christian Miesch is distressed by the fact that many representatives of former Soviet republics have invested their or ‘their people’s’ money in luxury real estate on Lake Geneva, ofteh using complex corporate structures in order to whitewash the money,” an article published on October 17 this year by the Swiss German-language Beobachter [http://www.beobachter.ch/justiz-behoerde/buerger-verwaltung/artikel/nationalrat_fragen-zum-fall-wiktor-chrapunow/] read. “An exemplary case in that regard is the one of former minister and mayor of Almaty Viktor Khrapunov who ‘back in Kazakhstan has deliberately lain his hands on hundreds of millions in state funds and diverted them abroad’. Together with other federal politicians from the SVP, the FDP (Freisinnig Demokratische Partei – centre-right) and the SP (Sozialistische Partei – left), Miesch has forwarded a number of critical queries with the aim to grill the Federal Council [Swiss government – ChvdL]. They come down to the question what the latter is doing in order to prevent ‘illegitimately obtained fortunes from ending up in Switzerland to get laundered over here through real estate transactions’. And also how it can be that persons who have been accused of money laundering and appear on the Interpol search list can obtain political asylum.”

Slow speed has been the Swiss’ adagium ever since more than five years ago Khrapunov and his wife Leyla joined their children, who were studying in Switzerland, by landing at the Geneva airport with an Antonov air carrier stuffed with 1.1 tonne in “ersonal belongings” – meaning antiques, works of art and jewelry. “Bank accounts belonging to the Ryskaliyevs and the Khrapunovs in Switzerland have been frozen,” Kazakhstan’s independent newsreel Tengrinews [http://en.tengrinews.kz/crime/Swiss-prosecutors-freeze-Ryskaliyevs-and-Khrapunovs-accounts-in-Switzerland-21626/] reported on August 7 last year, referring to the press-service of Kazakhstan Agency for Countering Economic and Corruption Crime (financial police).“The Federal Prosecutor’s Office of the Swiss Confederation is running a criminal investigation of the Ryskaliyevs on money laundering charges. The investigators discovered 3 accounts owned by the Ryskaliyevs and their close relatives in Swiss banks. The accounts contain significant amounts of funds exceeding 100 million Euro. The Federal Prosecutor’s Office has frozen the accounts,” the message was quoted as reading. “According to Kazakhstan’s financial police, the Agency is working hard to find and return assets illegally obtained in Kazakhstan and transferred outside the country,” the news report continues. “As for investigation of the criminal case related to the organized criminal group that the Khrapunovs have been orchestrating, the financial police sent an international request to the competent authorities of Switzerland asking them for legal support. The documents substantiating the request have were studied and analyzed by the Swiss authorities and served as a basis for the criminal prosecution of the Khrapunovs at the territory of Switzerland on money laundering charges. ‘Switzerland’s competent authorities have arrested the assets of the Khrapunovs family until the time the origins of the funds are defined. Bank, financial and other documents were seized for review and legal assessment,’ the police reported.” The measure was part of “judicial assistance” accorded to Kazakhstan in its investigations. A request from Astana for the Khrapunov couple to be extradited, though, was turned down.

The purchase of the frozen assets dates from Khrapunov’s flight from Kazakhstan – even though the ground seems to have been well prepared before that. Upon arrival of the parents in 2007, Elvira Kudryashova bought a luxury chalet, 49 chemin de Ruth, Cologny, for 32 million Swiss francs. Following this, the family purchased two uppity apartments downtown Geneva, 10 rue Rodolphe Toepffer and 28B chemin du Petit Sacconex, for 16 million each, followed by the purchase, for an undisclosed sum, of a seven-storey building, 3 rue du Mont Blanc. But the list of corporate interests is a lot longer. According to Kazakh prosecutors, Elvira is in control of at least three corporate entities: Phoenix International Holding, Dragon Financial Company and Unic Life Style Sarl. The latter firm in turn controls Phoenix Jewelry SA. Chairperson of the board of both Phoenix International and Dragon is said to be a certain Nicolas Garnier.

The company was first established on November 19 2003 and according to Swiss trade registers it initially had a board consisting of Leyla, Ilyas and Elvira under her maiden name Beydamani. As of April 2004, a certain Aynagul Sadikbayeva replaced Almaty’s first lady and the name of Daniyel Khrapunov, his and Leyla’s youngest son who had been borm less than five years earlier, was added to the list. On June 17, 2005, the company’s name changed into Swiss Kazakh Phoenix Holding, to change little later into Swiss Kazakh Phoenix Holding International, located at 63 Tole Bi (former Komsomolskaya) Street, downtown Almaty. From there on, it apparently moved to Switzerland and was to be headed by a Swiss national named Philippe Meyer.

As for mother Leyla, She seems to e mostly in charge of the overseas department, and her name pops up as chairperson of the board and controlling owner of both Swiss and Dutch Helvetica Capital and of Toepffer Investment. The longest list of posts as chairman of the board, however, concerns Ilyas, including Swiss Development Group (Switzerland), Swiss Development Group Capital (Luxemburg), Thermal Development SA, Thermal Development 2 SA, Hotel Duparc Holding, Hotel Duparc Mont Pelerin SA, Swiss Standard IB AG, SaaFee Hotels and Residence Development Group SA. The list could be considerably extended with probably dozens, possibly hundreds of other enterprises, both in Switzerland and offshore, under nominal control of proxies.

The Khrapunovs’ main financial transaction and reinvestment instrument seems to have been, and possibly still is, a Swiss company called Helvetica Capital SA, rue du Mont Blanc 3, Geneva. With a share capital of 100,000 Swiss francs, divided in 1,000 shares, the enterprise’s goal is being described as prise et administration de participations dans toutes societes ou enterprises a l’exclusion de prise de participations dans les societes immobilieres en Suisse. In other words: a nominee interest holder in all kinds of enterprises with little other aim than hiding the identity of the true owner. As of January 19 2010, Helvetic Capital, registered in Switzerland, had two authorised directors, being Leyla Khrapunova and  Swiss national by the name of Marc Gillieron. A note dated April 4 2011 was to report Leyla’s retreat from her post, leaving the entire job to her Swiss peer.

About the Ryskaliyev files, far less is known. The brothers seem to have been signaled in London at some point,, but have kept a low profile ever since their schemes fell through. “Former Akim (Governor) of Atyrau oblast Bergey Ryskaliyev and his brother Amanzhan Ryskaliyev, former member of the parliament, are accused of major embezzlement of funds from the budget of Kazakhstan,” Tengrinews’ report of August last year read further down. “The brothers disappeared shortly after Bergey Ryskaliyev was released from his duties of the Akim. They were allegedly seen in London in the end of 2012. […] According to Kazakhstan investigators, the Khrapunovs transferred to over $48 million and 7.7 million Euro to foreign accounts in Switzerland and to offshore accounts between 2003 and 2007. In October 2012 Leila Khrapunova was added onto the wanted list in suspicion of a major fraud. In late November 2012 Geneva prosecutors froze all accounts of the Khrapunovs in two Swiss banks, suspecting the family of money laundering.”

As we reported earlier, the Ryskaliyev scandal erupted in late summer 2012, and led, in the course of October, to the arrests of a number of former public officials and owners/managers of construction companies based in Atyrau. According to the provincial newspaper and newsreel Ak Zhaik (“White Ural” – www.azh.kz) a number of officials are awaiting trial behind bars, including former deputy governor Bulat Daukenov, former Atyrau mayor Askar Kerimov, as well as a number of lower-ranking officials – some of which have been conditionally released and promised grace in return for cooperation with the authorities in the form of proof and testimonies. The two most important culprits, however, remain on the run.

Among the entrepreneurs involved in the series of scams are Aibat Suleimenov, owner and general director of a company called Snaboilstroy LLP, involved in construction, maintenance and refurbishment services in the public infrastructure. Charges against Suleimenov were filed, according to Ak Zhaik, on August 21 last year, but a warrant for his arrest was only issued on November 16 – thereby offering him plenty of opportunity to escape which he apparently did. The same appears to be true for Nurlan Dzhoulmagambetov, director of Atyrausrandstroy, and a number of accounting department heads of various construction firms by the names of Gulmira Azbergenova, Murat Dzheldybayev, Galina Vakker and Erbolat Izbasar, who allegedly forged the accounts and documents to cover up the gaps in the expenditures and hide the kickbacks paid from project budgets to key figures in the public sector. Such multi-million kickbacks were usually in the order of 30 per cent of the overvaluation amount in contracts. Such overvaluation could easily run into tens of millions in US dollar, and in some projects, such as a trunk gas pipeline across the province and a water distribution system for Atyrau and surrounding townships, into hundreds of millions.

The chain of enterprises maintained by the Ryskaliyev brothers and their associates looks impressive and mainly consists of three “groups” as authorities dub them. The first “group” consists of a string of mutually affiliated companies known under the names Aktalin Group LLP, Atyraustroyprojekt, Tsentrstroy Ltd., Asia-Market-S, ATG Kurlys, BKA Groups, AtyrauStroyKom, Expolinks, Aksaray, Atyraugrandstroy, Aminastroymarket, Ekolayer and SP Utebainev. All firms are nominally owned by Bergey Ryskaliyev’s son-in-law Rustem Albakasov. Activities vary from construction design, construction contracting and subcontracting, material supply, surveying, consulting and business administration services to eve vaguer task descriptions. The second group includes firms belonging to a businessman, judging by the name of Korean origin, called Vadim Pak, and known as US-00 LLP, Atyrauinzhdorstroy, Munaykurylyservice Ltd., Atyrauinzhstroy and Atyraupolymerstroy. The third group belongs to Aibat Suleimenov, and apart from Snaboilstroy includes Atyraukapstroy, Eksan-Atyrau, Akas Alpha Grad and two SPs called Suleymenov and Mukhiyev.

So far, 13 cases are on the table. Among them is a 6.3 billion tenge (1 USD = approx. 150 tenge; 1 euro = approx. 200 tenge) overvaluation and subsequent overpayment in the construction of a gas pipeline from Atyray-town to the district of Kyzylkug, and another 2.5 billion tenge scam in the construction of a water supply network in the same district. The case has led to the arrest of the head of the Atyrau department of the state architecture and construction control service, Turlanbek Dzhiyenbayev, suspected ot having looked the other way in return for a share in the kickback. A third case in which 177.5 million tenge was embezzled concerns the overbilled construction of a number of schools and hospitals downtown Atyrau, while another 7 billion has “disappeared” in the process of the privatisation by the public sector of two public companies, Atyrau Akparat and Obltransgaz – which has led to the arrests of, among others, the head of the provincial financial department Baurzhan Dzhantemirov. Further cases include a 111.8 million tenge fraud related to the construction of a household waste burial site on the outskirts of Atyrau-town, and another case amounting to 45 million tenge in the construction of an electricity network in the area of Indersky.

Concerning the Khrapunov family’s assets, now still frozen, they must have felt the need from the very beginning that offshore havens were needed should anything go wrong in Switzerland. The Swiss company Helvetica Capital used to have, and assumedly still has, a Dutch subsidiary called Helvetic Capital BV, based at Schiphol Airport near Amsterdam. “Dutch” Helvetic Capital in turn controls a company, also based in The Netherlands according to information from Kazakh investigators, called Toepffer Investment. The boards of all the three companies are chaired by Leyla Khrapunova. The function of the Netherlands-based entities has remained unclear so far, but there is an indication that the Khrapunov couple had used it, and might still be using it, for the flower business they had acquired through the notorious stock-for-loan swaps that took place in the wake of the disintegration of the USSR. Authorities in Kazakhstan, however, have left a blank spot on this possible connection in the overall scheme so far.

It looks, however, as though the “Dutch connection” has later been diverted. A new “corporate vehicle” to funnel the Khrapunovs’ fortune was initiated last year with the Luxemburg-based Swiss Development Group Real Estate Investment SICAV-SIF SCA, the new fund is meant to have a life-span of seven years, with the option to prolong it with another three years. The fund claims to have accumulated half a billon Swiss francs so far from unnamed “investors” – leaving the tangible origin of the money hard to guess, but not its kind of origin. Assets under the fund include luxury tourist and residence resorts in Switzerland and Greece. Ever since, Khrapunov jr. has been signaled in Africa and Southeast Asia to lay his hands on tourist resorts and mining assets in exchange for the hot cash.

What became of those attempts is not yet known, but in Glamourland across the Atlantic he seems to have hit the bull’s eye. “The largest city in Kazakhstan has sued former government minister Viktor Khrapunov and several of his relatives in the United States, accusing them of systematically looting state assets for their own benefit,” Reuters [http://www.reuters.com/article/2014/05/14/us-kazakhstan-khrapunov-lawsuit-idUSBREA4D0NG20140514] reported in late May this year. “U.S. courts have jurisdiction because Khrapunov and his family have purchased real estate in Southern California, the documents show. A spokesman for the city declined to comment. […] When he was mayor, Khrapunov engineered the sale of state-owned real estate to entities controlled by family members, the city’s filing states. In some instances, Khrapunov then caused development permits to be issued in connection with the sites which increased their value. Khrapunov and family members then resold the parcels “at a significant profit, the lawsuit says. […] To conceal their activities, Khrapunov’s family executed several transactions abroad, the lawsuit says, including buying homes in Beverly Hills and Studio City, California.”

Some of the key mailbox firms are revealed in the list of defendants in the Californian case against Ablyazov: Elvira Kudryashova, Dmitri Kudryashov, Viktor Khrapunov, Leila Khrapunov, Iliyas Khrapunov, Elvira Khrapunov, Haute Hue LLC, Does, Canadian International Ltd, Madina Ablyazova, 628 Holdings LLC, Maro Design LLC, Mr. Fumigation Inc, RPM USA LLC and RPM-Maro LLC. The case was filed on May 13, but nothing about further hearings or other proceedings has reached the public domain so far. Should it finally go ahead, this might help Kazakh plaintiffs, meaning both prosecutors and an impressive list of private parties hoping to see some of their lost money back after all these years, to get things in the clear in Switzerland as well, thereby defying erroneous and misleading reports on the affair to blur the public eye.

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